H&R Block

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H&R Block

has a free this, that, and anoher. If you're in the know ---I need help in understanding how they plan to be in business next year. I don't know for sure but it looks like a put on to me Smiling  . So, how are they making money on this deal. IOW, how are collecting a fee for services rendered. Something isn't free.

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Beyond Saving
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 The "free" service only

 The "free" service only includes to 1040EZ. They hope to attract people to get a look at their finances and then when other paperwork is needed they charge for that. Worst case scenario, their people spend 15 minutes filling out a 1040EZ for a prospect. Also, they offer advances on tax refunds for a fee, which is attractive to the financially challenged who are most likely to need just the 1040EZ, so they have a chance at selling that too.

If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X


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It's another

Beyond Saving wrote:

 The "free" service only includes to 1040EZ. They hope to attract people to get a look at their finances and then when other paperwork is needed they charge for that. Worst case scenario, their people spend 15 minutes filling out a 1040EZ for a prospect. Also, they offer advances on tax refunds for a fee, which is attractive to the financially challenged who are most likely to need just the 1040EZ, so they have a chance at selling that too.

antelope hunt. You hide behind a bush, wave a stick, they come see what it is, and BANG. That's what I thought. The ads don't explain anything. (of course not). Ain't it nice to know we're just a herd of antelopies.

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Turbo Tax

says file taxes free. Yeah right, how much is their CD. I'm wondering if the cost of the CD is deductable.

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Vastet
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If you want to be in the

If you want to be in the know, go work for them for a season. In Canada they start courses sometime in the fall. If you pass the course you're offered a job.

Unless it's changed or different in the US, you won't learn much about corporate policy during the course. They focus on taxes. You'll probably have to start work to get an idea of how their pricing makes sense.

Bonus is you'll be able to do your own taxes for that year with ease.

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Beyond Saving
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Old Seer wrote:says file

Old Seer wrote:

says file taxes free. Yeah right, how much is their CD. I'm wondering if the cost of the CD is deductable.

Yes, any software program you purchase to assist you in tax preparation is deductible.

If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X


pauljohntheskeptic
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Tax companies

 I'm currently in my 8th year working for one of the big 3 tax prep companies. They are H & R Block, Jackson Hewitt and Liberty Tax. All 3 make money from those who are financially strapped and need their refund ASAP. All 3 were influenced or started by a guy named John Hewitt, the current founder and main owner of Liberty Tax. The US tax system is set up to be a redistribution of wealth using refundable tax credits such as - child tax credit, Earned income credit and education credits. None of these existed when I either when to college or had dependents that would have given me these refunds. This brings in the clients who are the most in need of cash early in the season. They are charged the most of all clients as well.

Tax prep companies charge per form in the brick and mortar locations. All 3 are franchise type corporations. They get the franchise owner to buy a franchise and soak them with fees for every return. The failure rate for these franchises is very high, they either close or sell to another owner in 4 or 5 years, sometimes in 1 or 2 years. The online versions on the other hand are owned by the parent company. As with the brick and mortar anything more complicated than a single W2 and/or a 1040 EZ usually costs you more. The IRS requires free efiling of returns from these companies but does not specify that all must be free. Therefore it's the same thing as a loss leader at Walmart or your local grocery chain. Something to get you in the door. Once you get started on your return, most people are vested in time and hate taxes probably more than going to the dentist. They just want to get it over. So even though it may cost them more than they originally thought they will pay to get it over. Another thing, state returns on all online programs are not free. Most charge at least $9.95 and up. There are ways to file completely free in most states. You do your return on a site such as Taxact and go to the state's website with your federal info. After you have once set up an account with your state, you simply type in the federal info and you are done. Few people know about this.

Turbotax is starting a new threat to the brick and mortar locations which will eventually kill all 3 major tax prep franchises as they currently exist. I'm sure you have seen their commercials by now. If you currently have mobile banking you have an example of how. This year the Turbotax ap uses photos of your W2 for example and fills out the forms. Expect this to expand over the next few years to do all of the info such as 1099-misc, 1099 mortgage and even 1099-B investments sales. In the past for example the IRS required every investment sale to be typed in on Schedule D, now you can send the summary data from your 1099-B. 

Brick and mortar will have a slow death, because clients think it gives their tax return some legitmacy, it doesn't though. The IRS doesn't care if you did it yourself or used a tax prep firm. 

In reality, the best and most efficient way to do the US tax system mostly exists. There is no reason that it can't be done directly by the IRS. Currently W2s, 1099s and all data is required to be sent to the iRS by the end of Febuary. It takes them awhile to update all of this data to each taxpayer. Once done, they use it to compare what you filed versus what you should have filed.

Instead, how about the IRS uses this data to compute your taxes. Then you login to your account and verify the information adding that which is new, such as the birth of a child or the death of someone on your return. Self employed persons would need to electronic transmit data or worst case login and submit it to the IRS at least quarterly. This would be people who are sole proprietors, such as house cleaners, lawn mowers, snow removal, and some subcontractors who don't get 1099s or W2s. This however would put out of business all the tax prep firms and some CPAs. Though the CPAs could concentrate on business returns or tax advice.

This is possible, but not likely to happen very soon due to the protectionism that exists due to lobbyists influence on Congress.

I know most people would like to change the tax code to something more fair and less complex. That is not likely to happen for years to come. I agree that the present US tax code is crap and should be tossed in the trash and completely replaced.

 

 

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"God is omnipotent, omniscient, omnibenevolent, - it says so right here on the label. If you have a mind capable of believing all three of these divine attributes simultaneously, I have a wonderful bargain for you. No checks please. Cash and in small bills." - Robert A Heinlein.


Vastet
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Tbh it isn't the poor who

Tbh it isn't the poor who pay the most. Not in Canada anyway. There are built in discounts for poor and students, and fees are based on how many forms have to be filled in. The average middle class tax payer will hand over >10x as much as the average poor person. Because it takes 10x as long to do their taxes. The average poor person or student I dealt with walked out without paying a cent. Those who did pay were looking at $5-15 maximum fee.

When I last worked there if your only income was assistance you didn't pay anything unless you wanted your refund that second. These days the number of people who want cash back has significantly dropped, because you don't wait 6-8 weeks for the government to send a cheque. It'll be less than a week usually. And you save tonnes of $ that way. The last year I was doing taxes only about 1/5th of my customers wanted cash back.

"Brick and mortar will have a slow death, because clients think it gives their tax return some legitmacy, it doesn't though. The IRS doesn't care if you did it yourself or used a tax prep firm."

This is false. H&R Block doesn't just do your taxes, they help you make the most of it, which other corporations aren't so good at (many of my customers were former customers of the other corporations you mentioned and weren't happy with the services offered). Furthermore, no software or website prevents you from having to do work, while tax preparers do. They'll also handle any assessments as part of the fee. For the whole year. You won't even know unless you lied to them and didn't give them some required paperwork.
They aren't going anywhere any more than accountants are. Not unless the tax codes are so simplified that every kid coming out of high school knows exactly how to do their taxes for the rest of their life without needing remedial education.

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pauljohntheskeptic
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I see you haven't lost your

I see you haven't lost your touch, nice to see you are still around.

 

Vastet wrote:
Tbh it isn't the poor who pay the most. Not in Canada anyway. There are built in discounts for poor and students,

There are no such discounts in the US.

Vastet wrote:

and fees are based on how many forms have to be filled in.

I did say that, the more forms, the more it costs in the US.

Vastet wrote:

The average middle class tax payer will hand over >10x as much as the average poor person.

In the US, there would be less forms for an average middle class taxpayer then someone at the FPL or up to 400% of FPL (Federal Poverty Level) who was filing to get credits.

In the US everyone has a 1040, 1040A or 1040Ez.

Someone getting earned income credits and child tax credits has: Schedule EIC, Child, form 8453, form 8812, worksheets, due diligience, form 2441 if childcare credit for example.

A Middle class family might have a 1040 and a schedule A, perhaps a child tax credit (non refundalbe)

Each form adds cost so the lower end family or single person with a qualifying child called head of household in the US wpuld pay more for the return.

It has nothing to do with the size of their refund.

Vastet wrote:

Because it takes 10x as long to do their taxes.

This is true for upper middle class, who own rentals, stocks, and own a business, though it doesn't take 10 times longer to do it.

Vastet wrote:

The average poor person or student I dealt with walked out without paying a cent. Those who did pay were looking at $5-15 maximum fee. When I last worked there if your only income was assistance you didn't pay anything unless you wanted your refund that second.

Yet another difference between our culture in the US versus Canada.

Over the years the cost of a tax return in the US at the big 3 has gone up at brick and mortar. American companies are focussed on making cash for themselves, not a public service.

Vastet wrote:

These days the number of people who want cash back has significantly dropped, because you don't wait 6-8 weeks for the government to send a cheque. It'll be less than a week usually. And you save tonnes of $ that way. The last year I was doing taxes only about 1/5th of my customers wanted cash back.

Maybe true in Canada, not true in the US. Some of these people get a refund equal to 1/3 to 1/2 of their annual income and they want it ASAP. It takes about 21 days in the US to get a refund.

Vastet wrote:

  "Brick and mortar will have a slow death, because clients think it gives their tax return some legitmacy, it doesn't though. The IRS doesn't care if you did it yourself or used a tax prep firm." This is false. H&R Block doesn't just do your taxes, they help you make the most of it, which other corporations aren't so good at (many of my customers were former customers of the other corporations you mentioned and weren't happy with the services offered). Furthermore, no software or website prevents you from having to do work, while tax preparers do. They'll also handle any assessments as part of the fee. For the whole year. You won't even know unless you lied to them and didn't give them some required paperwork. They aren't going anywhere any more than accountants are. Not unless the tax codes are so simplified that every kid coming out of high school knows exactly how to do their taxes for the rest of their life without needing remedial education.

In Colorado we have a very large Hispanic population. Some are legal some are not. They all file tax returns to get refunds. The illegals can get $1000 per child that reside in the US whether born here or in Mexico or your country Canada. They give their employers fake social security numbers and file with what is called an ITIN. An ITIN is a Tax Identification Number issued by the IRS to people who aren't able to get a social security number because they are here illegally, or don't have a work permit. If they have an ITIN they don't get any other benefits from our tax system besides the child tax credit and refunds based on other deductions for dependents. These dependents can live in Mexico or Canada and have an ITIN issued for the sole purpose of reducing the illegal taxpayer's income or in some cases legal ones (rare but happens). They claim they support a nephew in Mexico or Canada with their US income.

I have no clue about taxes in Canada, in the US I go to training with the IRS every year. They look at every return without regard to who prepared it, their words not mine. In cases where there are tax preparers aiding clients in cheating, they get hefty fines and jail sentances. The clients here in Colorado are largely  Hispanic and believe that one should go to an expert for their taxes just like they go to a doctor. They generally speak Spanish not English and thus we have bilingual preparers. No French ones like you have.

It is inevitable that the easier returns will end up going online or to mobile APs, though many will not for years. In the end there will only probably be one major company left, probably H & R Block due to their size. They will however reduce their footprint and costs by having far fewer offices.

In the US, there are many places poor, low income and seniors can get taxes done for free. AARP sponsors this for seniors. The IRS does figure simple returns for free at their locations but with the very large cutbacks in funding by the US Congress you must make an appointment to see them for anything these days.

I would not venture to discuss how your tax system and preparer firms operate in Canada since I have never even seen one of your returns and I have no idea at all in regard to your tax laws. 

The statistics for year on year from the IRS show an increase of self filed returns and decreases in returns from paid tax preparers.

You have things we do not, free medical for one, though it is on the ballot in Colorado this fall, take that GOP. 

 

PJTS

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"I guess it's time to ask if you live under high voltage power transmission lines which have been shown to cause stimulation of the fantasy centers of the brain due to electromagnetic waves?" - Me

"God is omnipotent, omniscient, omnibenevolent, - it says so right here on the label. If you have a mind capable of believing all three of these divine attributes simultaneously, I have a wonderful bargain for you. No checks please. Cash and in small bills." - Robert A Heinlein.


Vastet
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In Canada dependants,

In Canada dependants, income, pension plan contributions, union dues etc are all handled on the basic form. You only get additional forms for medication, capital gains, and other things that the poor don't generally have to be concerned with.

It's true the government doesn't care who prepared your taxes, it wasn't my intent to suggest otherwise. I was describing what the benefit of using a place like H&R is if 6 months later the government assesses you. They don't contact you at all, they contact H&R. H&R deals with the whole thing themselves.

Having experience with 'free' services I can tell you straight up they are shit. They don't have the motivation to get you every possible tax break, and they don't have the resources to retrain their people every year with the new system. You will rarely if ever get it done as well as if you had a professional service do it for you. In fact, due to free estimates, you can basically do your taxes for free at H&R. They do the whole thing, then quote you a price and give you a summary form that you could almost mail to the government as your taxes. Transfer the numbers on the summary to your forms and you're done. People don't take advantage of this only because they are so ignorant of taxes.

The government has a vested interest in you NOT getting every break, so going to the IRS directly is quite stupid.

The best way is to do it yourself, getting the necessary education and keeping abreast of year to year changes. The next best way is having a personal accountant you can trust. Then it's H&R and other professionals. A very distant fourth would be a free service, and noone should ever go to the IRS to get their taxes done there.

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pauljohntheskeptic
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Vastet wrote:In Canada

Vastet wrote:
In Canada dependants, income, pension plan contributions, union dues etc are all handled on the basic form. You only get additional forms for medication, capital gains, and other things that the poor don't generally have to be concerned with.

Nice! Not that way in the US, we have forms for everything. 

Vastet wrote:

  It's true the government doesn't care who prepared your taxes, it wasn't my intent to suggest otherwise. I was describing what the benefit of using a place like H&R is if 6 months later the government assesses you. They don't contact you at all, they contact H&R. H&R deals with the whole thing themselves.  

Again, not that way in the US. The IRS contacts only the taxpayer in regard to issues or qustions on the return. The taxpayer is responsible for everything in the tax return. All tax prep firms do on the client's request is to help them understand what the IRS has questioned, why and what actions they should do in answering them. They can go with the client to an audit only if they are part of the IRS system of recognized preparers, cpas, or an attorney. A standard preparer from H & R Block or the others can't go with the taxpayer to help.

Vastet wrote:

Having experience with 'free' services I can tell you straight up they are shit. They don't have the motivation to get you every possible tax break, and they don't have the resources to retrain their people every year with the new system. You will rarely if ever get it done as well as if you had a professional service do it for you.

I totally agree with you on this. I have done many amended tax returns for those who had "free services" as well as Turbo Tax self prepared by the taxpayer. They don't know the laws and don't take the time to do things correctly.

Vastet wrote:

In fact, due to free estimates, you can basically do your taxes for free at H&R. They do the whole thing, then quote you a price and give you a summary form that you could almost mail to the government as your taxes. Transfer the numbers on the summary to your forms and you're done. People don't take advantage of this only because they are so ignorant of taxes.

That is not how the big 3 do it in the US. No one walks out with a summary sheet from a free estimate. People do shop between them though. All 3 do free estimates. You should get the same exact refund from any of them. What differs is the price. H & R Block is the most expensive in the US, have to pay for that big advertising on TV and the $1000 a day to 1000 taxpayers campaign they are doing right now.

Vastet wrote:

The government has a vested interest in you NOT getting every break, so going to the IRS directly is quite stupid. The best way is to do it yourself, getting the necessary education and keeping abreast of year to year changes. The next best way is having a personal accountant you can trust. Then it's H&R and other professionals. A very distant fourth would be a free service, and noone should ever go to the IRS to get their taxes done there.

Since the US Congress cut funding to the IRS, it is near impossible to even get phone help from them. Average wait time in 2015 was like 99 minutes, with 80% hangups by the IRS, I have to look up the data for last season but it was awful.  Appointments are weeks out as well. 

In audits by the IRS caused by your mistakes, such as leaving out income or distributions from a 1099R retirement plan or 401K which you took early,  they delete every credit including ones you qualify to have and demand payment for the recalculated amount.So yes they have incentive to take away your tax breaks. I see this every Summer after the filing season when people get letters because the forgot about a W2 (income from an employer in the US)

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"God is omnipotent, omniscient, omnibenevolent, - it says so right here on the label. If you have a mind capable of believing all three of these divine attributes simultaneously, I have a wonderful bargain for you. No checks please. Cash and in small bills." - Robert A Heinlein.


Vastet
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Wow. The more I learn about

Wow. The more I learn about the US the happier I am being here.

There's really only one big tax preparer here, in H&R. There are others, but the only one that has an office in every city is them. I had to sign a non-compete clause and asked who I'd work for, and they were more concerned with me taking my customers and doing it on my own. lol

The Canadian government won't go out of their way to give you credits, but you don't instantly lose them over an error either. Actually on the one occasion I was audited they added like $400 to my refund. I was expecting $200 and got $666.67.

Phoning them is a real bitch here too. They set up a system on the net though which made it easier... kinda. It's a royal pain to get in the online system, but once you're there it makes it much easier. You can do everything online. I recall some people in the office being less than pleased when they brought it out.

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